Quick answer: Shift differential is extra pay added to your base rate for working less popular hours, such as nights, evenings, or weekends. It's either a percentage of your base pay (for example 10%) or a flat amount per hour (for example $2). To calculate it, work out the extra per hour, then multiply by the hours that qualify.
If you've seen "night differential" or "shift premium" in a job posting, this is what it means. It exists because employers need to staff hours most people would rather not work, so they pay more for them.
Here's how it works, how to work out what yours is worth, and what the rules say.
The Two Kinds of Shift Differential
Percentage differential. A set percentage of your base hourly rate. A 10% differential on $25 an hour adds $2.50, so you earn $27.50 an hour on qualifying hours.
Flat differential. A fixed extra amount per hour. A $2 differential on $20 an hour means $22 an hour on qualifying hours, whatever your base rate.
The two behave differently as your pay rises. A percentage grows with your base rate, while a flat amount doesn't, so a flat $2 is worth less, in relative terms, to someone earning $40 an hour than someone earning $18. Our guide to average shift differential shows typical rates by industry.
How to Calculate It
- Find the extra per hour. For a percentage, multiply your base hourly rate by the percentage. For a flat rate, it's the amount itself.
- Multiply by qualifying hours. Count only the hours that earn the differential, which may be the whole night shift or only hours after a certain time.
- Scale it up. Multiply by weeks to see the yearly figure.
Two illustrative examples, using round numbers:
| Base pay | Differential | Hours a week | Extra per week | Extra per year |
|---|---|---|---|---|
| $20/hour | $2 flat | 40 | $80 | $4,160 |
| $25/hour | 10% ($2.50) | 36 | $90 | $4,680 |
Yearly figures assume 52 weeks. You can try your own rate in the shift differential calculator, or open the examples above with the numbers already filled in: $20 plus $2 flat and $25 plus 10%.
Which Hours Count?
Employers define this differently, so ask before you accept a job:
- Every hour of a night shift, or only hours between certain times
- Only hours after midnight, at some employers
- Weekend and holiday premiums, which may stack on the night rate or replace it
The Philippines is a clear example of a rule tied to clock hours: the law sets a minimum differential of 10% for work between 10pm and 6am, and only those hours count. See our guide to the Philippine night differential.
Is Shift Differential Required by Law?
It depends on the country.
- United States: federal law doesn't require private employers to pay a shift differential. It comes from the employer, a union contract, or sometimes state or local rules. The federal government pays its own General Schedule employees 10% for regularly scheduled night work.
- Philippines: at least 10% for work between 10pm and 6am.
- UK: no legal minimum night premium. It depends on your contract. Working-time rules for night workers are covered in our UK and EU night work guide.
Does It Count Toward Overtime?
In the US, yes. A night differential is part of your "regular rate", so overtime is calculated on your base pay plus the differential. At $20 an hour with a $3 differential, night overtime is 1.5 times $23, or $34.50 an hour, not 1.5 times $20. Our night shift workers' rights guide covers how to check your payslip.
Getting the Most From It
- Compare offers by the yearly value, not the headline rate. A higher percentage on a lower base can be worth less.
- Ask which hours qualify and whether premiums stack.
- Check your payslip. Make sure the differential is applied to the hours you really worked, including overtime.
- Negotiate if it's missing or low. See our guide to negotiating shift differential pay.